Indian Renewable Energy Development Agency (IREDA) has shown consistent growth and significant improvements in governance and performance metrics since its listing. This report delves into the insights shared by Pradip Kumar Das, the CMD of IREDA, highlighting the company’s achievements, future plans, and strategic initiatives.
Performance Highlights:
Consistent Growth:
- IREDA has demonstrated both quantitative and qualitative growth over the past four years and three months.
- The company has maintained an impressive growth rate, particularly in the last quarter, with sanctions reaching approximately ₹3,82,000 crore, a significant increase from ₹1,200 crore in the previous year’s first quarter.
Improved Governance Standards:
- The net Non-Performing Assets (NPA) have reduced drastically from 7.18% in March 2020 to 0.99% in March 2024.
- IREDA's swift reporting and results declaration have set a benchmark, with the company completing its AGM ahead of many peers and providing provisional data promptly.
Quality Asset Management:
- The company’s focus on quality asset management and corporate governance has resulted in a robust performance.
- IREDA’s assets primarily consist of commissioned projects, reducing provisioning requirements and enhancing the bottom line.
Strategic Initiatives:
Section 54EC Bonds:
- IREDA has requested approval to issue Section 54EC capital gain bonds, which offer tax exemptions on long-term capital gains if invested for three years.
- This move is expected to reduce the cost of capital from 7.5% to approximately 5.25%-5.5%, making more projects bankable and accelerating the achievement of the 500 GW renewable energy target.
Funding Plans:
- IREDA is considering a Follow-on Public Offer (FPO) to augment its equity base and maintain a healthy Capital Adequacy Ratio (CAR).
- The company recently raised ₹1,500 crore for ten years at a 7.42% interest rate, reflecting strong market confidence.
Focus on New and Challenging Sectors:
- As the sole extended arm of the Ministry of New and Renewable Energy (MNRE), IREDA is committed to financing new and emerging renewable energy projects.
- The company emphasizes rigorous due diligence, compliance, governance review, and monitoring to manage risks effectively.
Outlook:
IREDA’s strategic initiatives, robust governance, and quality asset management position it well for future growth. The potential approval of Section 54EC bonds could significantly lower the cost of capital, enhancing project viability and accelerating renewable energy development in India. The company’s proactive approach to governance and timely reporting continues to build investor confidence, as evidenced by its strong stock performance.
IREDA's journey towards Maharatna status is marked by consistent performance, strategic initiatives to reduce the cost of capital, and a strong emphasis on governance and quality asset management. With a solid foundation and forward-looking strategies, IREDA is well-poised to continue its growth trajectory and play a pivotal role in India's renewable energy sector.
